Canada: The Nova Scotia RFP Process And PPA For IPPs

Last Updated: June 15 2012
Article by Sven Walker

Nova Scotia's Renewable Energy Plan, brought into effect by the Government of Nova Scotia in 2010, requires that by 2015, renewable energy account for 25% of the energy supply. A further target of 40% by 2020 has been set. As part of this goal, Independent Power Producers (IPPs) will procure 300 GWh under a Power Purchase Agreement (PPA). IPPs will be awarded PPAs through the Request for Proposals (RFP) process, which will be overseen by the Renewable Electricity Administrator (REA). The REA is Power Advisory LLC, appointed by the government in July 2011.


A draft Request for Proposals (RPF) Process was issued by the REA on April 9, 2012.

Proposals will be first reviewed to ensure that they satisfy the Mandatory Requirements. They will then be evaluated on a points system to establish a points-score. Projects will then proceed to the price evaluation stage where each Proposal's Evaluated Proposal Price will be calculated, according to which Projects will be ranked.

Mandatory Requirements:

The Proponent Must

  1. Have submitted a Notice of Intent to Bid and a non-refundable Notice of Intent to Bid Fee of $5,750 by November 22, 2011.
  2. Be an Independent Power Producer, as defined under N.S. Reg 155/2010: A renewable low-impact electricity generator i) of which no more that 49% of the voting securities are held by a public utility in combination with any affiliate of the public utility, and ii) that sells electricity a) in Nova Scotia to public utilities for retail sales to the utilities' customers, or b) for export outside of Nova Scotia.
  3. Agree to be registered to do business in Nova Scotia prior to the Project being interconnected to the transmission system.

The Project Must

  1. Be a Renewable Low-Impact Electricity Generation Facility as defined under the renewable Electricity Regulations (N.S. Reg. 155/2010).
  2. Be a New Build or, under certain circumstances, an Expansion.
  3. Utilize a Proven Electricity Generating Technology which is readily available.
  4. Be located in Nova Scotia and electrically connected to the Nova Scotia electricity transmission grid.
  5. Have a Name Plate Capacity of between 4 MW and 80 MW.

Commercial Operation Date

The Project must have a Commercial Operation Date on or before January 1, 2015.

Project Site Control

The Proponent or an affiliate must have a lease or an option for the lease, or own or have an option to own, the lands for the Project Site for the full Contract Term.

Environmental Assessment

The Proponent must declare whether the Project is a Class I or Class II undertaking as defined under the Environmental Assessment Regulations made under Section 49 of the Environment Act and demonstrate that it has made efforts to secure any necessary Environmental Approvals.

Interconnection Request

Interconnection Feasibility Study: The Proponent must provide a copy of an Interconnection Feasibility Study report from the Nova Scotia Power System Operator (NSPSO) for the Project and indicate whether the Proposal has selected Energy Resource Interconnection Service (ERIS), Network Resource Interconnection Service (NRIS) or both as part of the GIP Interconnection Request process.

Proponents were required to initiate an Interconnection Request under the process provided for by the Nova Scotia Power Incorporated (NSPI) Generator Interconnection Procedures (GIP) by November 21, 2011 in view of the Interconnection Feasibility Study to be performed by the NSPSO.

Locational Losses Report: Proponents must submit a Locational Losses Report that will estimate the locational losses for the Project. Proponents must request the Locational Losses Report from the NSPSO at least 30 business days prior to the Proposal Submission Deadline.

Proponent Experience

The Proponent or a Project Team member must demonstrate experience in successfully planning, developing, financing, constructing, and operating one or more renewable energy facilities.

Provincial Content Plan

The Proponent must provide a Provincial Content Plan for the Project describing the sourcing of all major equipment and on-site labour from Nova Scotia. In the event of a tie between Proposals, the Provincial Content Plan may, in certain circumstances, be used as a tie breaker, with the Proponent having the higher proportion of provincial content relative to Total Project Cost selected.

Evaluation Criteria:

The Proponents will be evaluated on a points-system, with a total of 100 points available. Proposals with a Name Plate Capacity of 50 MW or less must achieve a minimum total point score of 60 to proceed; proposals with a Name Plate Capacity of greater than 50 MW must achieve a minimum total point score of 80 to proceed. Proposals are assessed based on the following six criteria:

1. Network Upgrade Requirements (40 Points)

Points will be awarded based on the proposed Point of Interconnection of the Project. The Point of Interconnection may be located in one of four zones into which the province has been divided. The zone in which the Point of Interconnection is located will determine the points awarded.

Projects in zones 3 and 4 are only rewarded points if Proponents have selected either the Congestion Management Alternative (for projects with a project size equal to or less than 20 MW), or have chosen to pursue the Forgo Transmission Credits alternative.

2. Project Team Experience (15 Points)

Proponents will be assessed based on the experience of the Proponent's Project Team in developing, financing, and constructing projects substantially similar to the proposed Project. Where Project Team experience is provided primarily by technical, financial or legal advisors, Proponents will receive lower scores.

3. Financial Assessment (15 Points)

Proponents will be assessed based on a financial plan submitted by the Proponent which indicates the firmness of the Proponent's funding commitments. The Proponent must demonstrate the capability to fund the project through internally generated or available funds.

4. Resource Assessment (10 Points)

Proponents will be assessed based on the level of uncertainty associated with the renewable energy resource upon which the Project output estimate is based. Wind generation facilities will be assessed based on meteorological data.

5. Environmental Assessment (10 Points)

Projects will be assessed based on the Proponent's progress in securing environmental assessment approvals for the Project.

6. Community Acceptance (10 Points)

Projects will be assessed based on community engagement to date, planned community acceptance, and community engagement experience on other projects.

The Power Purchase Agreement (PPA)

On May 25, 2012 the Nova Scotia Utility and Review Board approved the Renewable Electricity Administrator's (REA) Standard Form Power Purchase Agreement (PPA) for proposals for 300 GWh. The PPA is a standard contract which will be entered into between Nova Scotia Power Incorporated (the Buyer) and the Independent Power Producer (the Seller)..

The REA indicated on May 3 on the website that it expects that proposals will be due no sooner than June 15.

PPA (compliance filing of May 10)

Facility Interconnection

If the Interconnection System Impact Study estimates Network Upgrade Costs in excess of the Threshold Amount (which is determined according to the zone in which the Point of Interconnection is located), parties agree to negotiate and consider amendments to the Project or PPA.

Congestion Management Alternative: If the Project has selected the Congestion Management Alternative, the Seller must select both the Energy Resource Interconnection Service (ERIS) and the Network Resource Interconnection Service (NRIS) in its Interconnection Request. The Seller may be obligated to proceed with ERIS if the Interconnection System Impact Study indicates that Network Upgrade Costs exceed the Threshold Amount ($25.90/MWh). The Seller also gives up any right to compensation for curtailment by selecting this alternative.

Forgo Transmission Credits Alternative: Proponents selecting this alternative are required to pay the cost of required Network Upgrades.

Scheduled Date for Commercial Operation

If Commercial Operation is delayed (other than by reason of Force Majeure), the Seller will be liable to NSPI for liquidated damages in the amount of $150/MW for every day of delay up to 365 days. If Commercial Operation has not occurred 12 months after the Schedule Operation Date, NSPI may end the PPA and NSPI may demand an Early Termination Payment.

Renewable Energy Credits

The Seller assigns all interest in Renewable Energy Credits purchased by NSPI to NSPI.

Delivery and Acceptance of Energy

If Net Output of the Facility during any Contract Year (excluding the first year) is less than 80% of the Energy Bid, the Seller will be liable to NSPI for liquidated damages. If Net Output of the Facility between the beginning of the second and the end of the fifth Contract Year is less than 80% of three times the Energy Bid during a consecutive period of 36 months, the Seller may restate the Energy Bid and pay liquidated damages, or demonstrate, amongst other things, that the Facility was designed and constructed to maintain the New Output of the Energy Bid. During the first Contract Year the Seller may restate the Energy Bid to no less than 90% of the Energy Bid together with liquidated damages.

NSPI must purchase the entire Net Output of the Facility except where the Facility is not operated in a manner consistent with Good Utility Practice or the Generator Interconnection Agreement. The Seller may claim the price that would have been payable by NSPI for such Net Output.


The Seller is not entitled to any claim for any curtailment effected pursuant to the Generator Interconnection Agreement except where:

  1. The Seller has not selected the Compensation Management Alternative and the Seller's facility is available for dispatch as part of the day ahead or intraday (three hours) and curtailment is due to dispatch instructions for the day ahead or intraday (three or four hours ahead) scheduling by NSPI, or
  2. The Seller has not selected the Compensation Management Alternative and the Seller has selected NRIS and the curtailment is due to transmission limits to manage congestion.

In the above circumstances, the Seller may claim compensation in an amount equal to the Energy Rate multiplied by the difference between the Expected Output and the actual Net Output for the hour.

The Generator Interconnection Agreement states that NSPI may require curtailment for as long as reasonably necessary if delivery of electricity could adversely affect NSPI's ability to safely and reliably operate and maintain the Transmission System.

Payment and Costs

The NSPI will pay the Seller the Energy Rate specified by the Seller except: 1) during the Interim Period (the period between the interconnection of the Facility to the System but prior to the Commercial Operation Date); 2) for the generation of "excess energy" (1.20 times the Energy Bid); 3) where the Seller fails to maintain Electricity Standard Approval of the Facility. In those three circumstances, payments will be the lower of the Energy Rate or the Incremental Energy Rate (the cost to NSPI of generating or purchasing energy from sources other than the Facility).

The PPA does not apply to payments of Ancillary Services from the facility.

Performance Security

The Seller must provide Performance Security in the amount of $25,000/MW as Pre-Commercial Operation Date (COD) Security within 10 days of executing the PPA. The pre-COD Security will be returned to the Seller upon request following Commercial Operation. The Seller must provide and maintain Post COD Security in the amount of $20,000/MW following the COD for the length of the Term. The NSPI may draw upon the Performance Security if the Seller breaches its obligations. In that case, the Seller must provide replacement Performance Security.


The term of the PPA is 20 years from the Commercial Operation Date (COD). Even if the Facility has not achieved Commercial Operation by the Scheduled COD, the term will expire 20 years after the Scheduled COD, with the exception of delays caused by a Force Majeure. Where there is a Force Majeure, the Scheduled COD and the Term will be extended by the length of delay caused by the Force Majeure. If there is a Force Majeure event lasting for more than 12 months prior to Commercial Operation, either party may end the PPA without penalty.

Force Majeure

If either party is unable to fulfill certain obligations because of a Force Majeure event, the party is excused from the performance of those obligations for the length of the force majeure, provided that, amongst other things, the affected party has tried to mitigate the effects of the Force Majeure. No obligations to make payments that are owed are excused. If there is a Force Majeure event lasting for a total of 30 months in a 60 month consecutive period following Commercial Operation, either party may end the PPA without penalty.

Project Lender Provisions

Sellers may, subject to certain conditions, enter into a Project Lender's Security Agreement. If a Project Lender's Security Agreement remains outstanding, NSPI may not terminate the PPA on grounds of Seller default unless notice has been given to the Project Lender, and the Project Lender has had the opportunity to cure the default on behalf of the Seller. A Project Lender may acquire the Seller's interest in the Project, at which point the Project Lender becomes liable for the Seller's obligations. Upon default of the Seller, the Project Lender has the opportunity to enter into a new agreement.

Change in Law

In the case of a Change in Law the Parties will negotiate to amend the PPA to reflect the expected economics of the Seller prior to the Change in Law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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